In an opinion piece published by MarketWatch, the president of the nation's third largest non-bank lender says institutions such as his could find themselves in a tough situation should liquidity dry up. So tough, in fact, it could endanger the entire financial system.
Sanjiv Das, CEO of Caliber Home Loans, says rising home prices which have made owning a home less affordable has also made life difficult for mortgage lenders. Originations have fallen, and after lenders reduce costs then "they are faced with the decision of whether to lower margins or credit standards.
A "race to the bottom" such as occurred before the housing crisis isn't the only danger Das sees. Another is liquidity risk, the inability of a firm to meet short-term financial obligations such as a payroll. This risk is particularly acute in the housing sector because non-bank lenders originate more than 50 percent of home loans compared to 9 percent in 2009 and account for 45 percent of servicing....(read more)